Santander to charge fee for overdrafts

Santander has become the latest bank to levy charges on overdrafts - 50p a day or £5 per month on a new current account - but cut fees for going overdrawn without permission.

Santander: Restructuring overdraft fees

The Spanish bank is launching a new current account with lower fees for customers with an unauthorised overdraft.

Santander is replacing interest charges with daily fees for those who are authorised to go into the red.

Customers who go into the red with permission will be charged 50p a day with a maximum of £5 a month, replacing interest rates of 12.9% or 19.9% depending on account. Those who go into an unauthorised overdraft will be charged £5 a day, which is capped at a total of £50 a month.

Adding on another levy, Santander will also be charging £5 for every item paid whilst in the red without permission and £10 for every unpaid item. This works out as the paid item fee being 86% lower and the unpaid item fee 71% lower than charges on the group's standard current account.

Santander is planning to write to their existing current account customers to let them know of this new account. It will be available in December to those with a main current account at the bank, who are paying a minimum of £1,000 a month in.

Nici Audhlam-Gardiner, director of banking at Santander UK, said: 'The overdraft fee structure on the new account is simple to understand and transparent.'

They follow after Lloyds who announced plans earlier this month to restructure their overdraft charges so customers without permission to go into the red would pay lower charges.

After a winning a High Court test case, several banks have changed the structure of their authorised overdraft fees. The Office of Fair Trading is still working with them to make their charges fairer and easier to understand.